ECONOMIST’S EYE
HE IRISH economy is balancing on a knife-edge,
T
according to UCD economist Colm McCarthy. So far the
economy has managed to steer clear of a crash and has
been heading for that most elusive of economic
outcomes, an orderly slowdown. However, McCarthy
warns that the economic clouds have been darkening
since the beginning of the year and worse may be yet to come.
“All of the data for the second half of last year pointed to a
slowdown rather than a crash. However, the figures for the first
few months of 2008 are pretty bad. There is definitely an
implication of further weakness. But it will be some time before
we know the full picture.”
By far the worst indicator, according to McCarthy, is the
turnaround in confidence. Indeed, confidence among firms in the
Irish services sector is at its lowest level since the 9/11 terror
attacks in the US, according to the latest Purchasing Managers
Index from NCB. At the same time, the Live Register had its worst
month since 1980 when an additional 8,500 people signed on in
February, bringing the overall number of claimants on the
seasonally adjusted Register to 187,900 and pushing the rate of
unemployment up to 5.2%. “All the confidence indicators from
NCB to the purchasing managers have weakened significantly.
When you couple that with tax revenue, which has fallen off
significantly, the outlook is not rosy.”
Inevitable slowdown
So what has gone wrong? McCarthy argues that the slowdown
was inevitable and in fact was disguised for a number of years.
The Celtic Tiger actually came to an end in 2002, he says, but the
impact was disguised through the continuing expansion in the
housing and construction sectors. “Up to 2002, we had broadly
based economic growth across a range of sectors. Since then it has
been a credit-fuelled housing boom. In fact, competitiveness has
been weakening for a number of years and those chickens are
now coming home to roost.”
The story is familiar: by 2006 we were building 90,000 homes
and in 2008 this figure will fall to a little over 40,000. But it is not
just construction firms that are feeling the effects, it is also
impacting all ancillary industries such as timber, paint and glass,
which have had their output halved in two years.
CUTTING OUR CLOTH
As the country continues to aim for that most elusive of economic outcomes –
an orderly slowdown – Jane Suiter talks to UCD economist Colm McCarthy
about what’s gone wrong and what changes need to be made
PAGE TEN UCD CONNECTIONS
Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40  |  Page 41  |  Page 42  |  Page 43  |  Page 44  |  Page 45  |  Page 46  |  Page 47  |  Page 48  |  Page 49  |  Page 50  |  Page 51  |  Page 52  |  Page 53  |  Page 54  |  Page 55  |  Page 56  |  Page 57  |  Page 58  |  Page 59  |  Page 60  |  Page 61  |  Page 62  |  Page 63  |  Page 64  |  Page 65  |  Page 66  |  Page 67  |  Page 68  |  Page 69  |  Page 70  |  Page 71  |  Page 72  |  Page 73  |  Page 74  |  Page 75  |  Page 76  |  Page 77  |  Page 78  |  Page 79  |  Page 80  |  Page 81  |  Page 82  |  Page 83  |  Page 84